spiff are “gifts” given by the charity in exchange for your contribution. Kind of gift with purchase, if you want. Common gifts for charitable car donation are airline tickets and vacation packages. They are not exactly the gifts and there are terms and conditions that you need to be aware.
companies know the value of the free trial and the only way to get it is to make a deal with the charity. The company will provide access to their services or quantity of the products instead of love publicly offer them as incentives for donations. This is a win-win-win situation. The charity receives donations from patrons receive patrons “refresh” instead, and the company gave spiffs gets free publicity. Everybody is happy.
Let’s say that when you make a donation, a charity is offering you “refresh” two free nights in a hotel in a popular tourist destination. Great. But what people do not know is that you must declare the value spiff income on your taxes. And yes, you will pay income tax on that amount. This effectively reduces the net value of tax deductions related to your donation. This is not a big deal if the value spiff is negligible, but the big spiff can almost exclusively against your income tax allowable.
oftentimes these spiffs can turn out to be a better deal than you can get or compose myself.
Looking for tickets to the hottest show in town? Rate your car and get two of these target instead. For some people, the intangible value was far greater tax consequences.
Have you looked everywhere to try to find the newest, hottest toy for your child or grandchild? Charities keep up these things and sometimes safe levels hottest new products. They run the promotions entice patrons to make big contributions in exchange for getting these hot products spiff. Even if spiff eats up a large amount of the value of the actual contribution, how can you put a price on happiness of your child’s or grandchild’s?
Let’s look at the downside of this practice. Say you’re looking for income taxes of $ 500 dollars and you get two tickets with a combined value of $ 100. Technically, you will only be allowed to take a charitable income tax $ 400. And you have to declare $ 100 worth of tickets and income, which will then be taxed at the same rate as the rest of your income.
Another negative about this job is spiffs are oftentimes difficult to use or cash. Sometimes companies that give them to set up redemption rules so as to make it very difficult to actually get the value they assigned to them and that you will now have to declare income. These types of companies are looking to “cash in,” so to speak, on a charitable income tax, but do not really want to shell out money, goods or services when it comes time for redemption.
There is also the potential for abuse of unscrupulous types. They can make a legitimate contribution to get the “refresh”, but will turn around and offer for sale at inflated prices, especially if there is a ticket to a must-see event or hot new product. This may adversely affect the reputation of the charity provides.
The moral of the story is to educate yourself and deal with known, reputable charities.